Pennsylvania farmers cultivate customers on assistance

This is the second in a two-part series examining the commercialization of the local foods movement

June 18, 2012 1:16 PM

By Teresa F. Lindeman Pittsburgh Post-Gazette

Beaver County farmer Ed Jodikinos reached into his pocket and pulled out a handful of wooden tokens that customers at the Main Street Farmers Market in Washington, Pa., had used to buy fresh produce.

On that particular late May day, the Jodikinos stand was offering rhubarb, lettuce, beets, cabbage, broccoli, radishes, strawberries and more.

The bulk of the produce stand's sales that day came through an exchange of traditional U.S. currency, but the tokens were evidence that some food assistance recipients were using part of their benefits -- and a special token-based system set up by the market's operators -- to buy local fruits and vegetables.

Nationally, use of food assistance has grown in recent years, driven in part by the economic downturn. The Supplemental Nutrition Assistance Program, formerly known as food stamps, served about 45 million Americans in fiscal 2011, up from about 17 million in 2000, according to the U.S. Department of Agriculture. Almost half of the participants are children, the department estimates.

GOING LOCAL

A two-part series examining the commercialization of the local-foods movement.

While there's little welcome news in the need for such help, the growth has brought efforts by more retailers and food purveyors to accommodate the demand as well as a push by government agencies and nonprofits to improve access to fresh, healthful foods.

The idea of helping food assistance dollars go toward buying local produce has widespread support, yet making it happen has been a challenge -- and it isn't clear if local growers will ever be able to serve that audience in a significant way.

For farmers and farm market operators, there are issues with the costs, the technology and the paperwork involved in accepting benefits.

Connecting local food and the recipients can be tripped up by transportation challenges. A recent USDA report estimated that about one-third of low-income households generally shop for food within a mile of their homes, with another third shopping between one and four miles away.

Finally, a lack of awareness about the local produce programs that accept such payments may leave some beneficiaries unfamiliar with the option, while those who are aware may believe farmers market prices will be higher than those of chain stores -- something that the market operators believe isn't true.

In the first two years that the Main Street Farmer's Market system was in place, recipients spent just a couple of thousand dollars all summer, according to Al Lucchini, a board member of the nonprofit program that was among the first farmers markets in Pennsylvania to offer the service.

"I had anticipated it would be significantly more than that," Mr. Lucchini said.

It's still early but he reports that this year -- the program's third year -- seems to be off to a stronger start. "We're not giving up. We're going to pursue our goal."

The ability to buy local, fresh foods is the next frontier for the U.S. food assistance program, which experienced a sea change about a decade ago, when technology made it possible for benefits to come in the form of plastic cards that could be swiped through credit card readers.

The programs, first launched in the 1960s, had long been dependent on inefficient paper food stamps that were clunky for retailers to accept and embarrassingly obvious to other shoppers, as well as hard to track.

The move to electronic benefits transfer, or EBT, helped dramatically cut improper payments in the past 10 years, said Kevin W. Concannon, undersecretary of food, nutrition and consumer services for the U.S. Department of Agriculture, during a recent visit to the Pittsburgh area.

Technology also made it easier for retailers to accept the benefits as payment. That, plus the economic downturn, helped drive an increase in the number of stores authorized to redeem benefits from 160,000 in 2005 to more than 230,000 in 2011.

Even hold-outs came around. Mr. Concannon told the story of warehouse club operator Costco, which didn't take food stamps but agreed to do so at a store built in New York City a few years ago. Three weeks after that store opened, Mr. Concannon said, an executive for the Washington State chain called and said the company wanted to add the program to all of its locations.

"Then we had Target stores, Rite Aid and then all of the national chains came in," Mr. Concannon said. "This is a business issue for them."

According to an April 2012 USDA report, in fiscal year 2010, 83 percent of benefits were redeemed in supermarkets or super stores, while 6 percent were used at grocery stores and 4 percent at convenience stores.

Phil Lempert, editor of the online food marketing site Supermarket Guru, earlier this year posted two Web videos offering suggestions on how retailers can better serve such customers -- from opening stores at midnight to offering sales on larger items at the beginning of the month when most benefits come out and then moving to deals on smaller items later as benefits run out.

It's important to respect such customers and help them use their benefits to eat healthy, he said. "To ignore them would be losing out on gaining the business of a very large segment."

Nathan Holmes has no intention of ignoring them. The co-founder of Clarion River Organics, a grower's cooperative in Sligo that sells produce from farms all around the Clarion County area, worked all spring on setting up ways to sell fruits and vegetables to customers on food assistance.

"It's been a sort of interesting process," he said. "I think they want to encourage this but at the same time, there's a lot of hurdles if you're a small processor."

Clarion River sells to places like Whole Foods Markets and Giant Eagle, and has been increasing its business through farmers markets. Its Community-Supported Agriculture program has about 200 customers buying several months of regular deliveries of produce.

On April 30, the co-op was approved by the government to accept food assistance. Next, Mr. Holmes applied to a program with the state Department of Public Welfare to get a free wireless terminal to process the EBT card payments. Clarion River was approved for that, too, saving several hundred dollars. Mr. Holmes is still concerned that the co-op will have to pay a monthly processing fee that will cut into already thin profit margins.

He regularly emails the founder of a San Francisco company, Square, which came up with a system that allows small businesses to easily process credit card transactions by sticking an attachment into an iPhone. Square charges only a flat 2.75 percent per transaction. Mr. Holmes thinks that device, or something like it, could be set up to take EBT transactions.

In the meantime, he's dealing with the available technology because he and co-founder Zeb Bartels are interested in expanding Clarion River's customer base beyond well-to-do neighborhoods -- places that tend to attract farmers markets. "We don't just want to put our eggs in that basket," he said.

This year, for the first time, Clarion River offered half-price subscriptions for food assistance recipients. A large basket usually priced at $25 would cost $12.50 for those customers, while $15 small baskets would be offered for $7.50.

Making the CSA program fit with government requirements wasn't easy. Typically, customers pay at the beginning of the year or in four installments. EBT recipients aren't allowed to pay in advance for product they haven't yet received.

The plan that Clarion River came up with was to bill two times a month. Mr. Holmes noted that benefits are issued at staggered dates. "You have to find out when people are going to have money in their accounts."

He's also a part of the Pittsburgh Food Policy Council, a 3-year-old collaborative group that brings together stakeholders in the local food infrastructure from food banks to universities and companies. That group is currently working to try to help more farmers markets accept wireless EBT payments.

Without card reader terminals, such transactions can be done by making a phone call to a designated line, punching in a number and then waiting for a few minutes for the sale to be approved.

Mr. Jodikinos, the Beaver County farmer who was selling at the Main Street Farmers Market, said using that takes too long, especially when other customers are lining up for their strawberries or lettuce.

Although Mr. Holmes wasn't sure investing in a token system like that used at the Main Street Farmers Market was a good investment -- he's still counting on technology to come through for EBT users -- Mr. Jodikinos offered his endorsement.

The Main Street Farmers Market won a USDA grant in 2009 that helped it buy the wireless terminal as well as small gazebo that is used as an information booth as well as a place for food assistance recipients to swipe their cards and pick up wooden tokens emblazoned with the market's name.

The grant also helped buy the tokens and pay for promotion, which the group has advertised in seniors publications, as well as at hospitals, churches, low-income housing sites and schools.

On a recent sunny day, board member Leslie Dunn stood in that booth with a box of tokens ready to distribute. The group initially bought between 3,000 and 4,000, reflecting optimism at how the program would be accepted.

Users can convert benefits for as many of the $1 tokens as they want and then spend them at the booths, using the wooden discs only on approved products. That means, for example, no alcohol from the wine booth. The 25 or so vendors all had to be trained on what qualified and agree to follow the rules or risk the market losing its authorization.

Unused tokens can be turned in at the booth and the credits restored to the user's account. Vendors also turn in tokens at the end of each market, and then get a check for that amount at the next week's market.

"A lot of people use them," said Victor Torres, manager of the booth selling produce from Simmons Farm in McMurray. The booth was bustling with customers looking over its display of peaches, cucumbers, broccoli, beets, zucchini, lettuce and green onions.

"It's more business for us," said Mr. Torres, who noted Simmons has also done well accepting different wooden tokens given out by the nearby food pantry, a program that started a year after the EBT program and was modeled after it.

Mr. Lucchini said use of the food pantry tokens actually took off faster, perhaps because participants are directly given tokens and told that the discs can be used to buy fresh fruits and vegetables at the farmers market.

Still, he and the other board members believe in the push to increase sales to food assistance recipients. "It's is something that we are committed to grow," said Suzanne Ewing, volunteer market coordinator and board president, who also hopes to convince recipients that shopping at a farmers market is a good value.

As for the transportation issues, there's hope there as well. She said city officials in Washington would like a bus route to swing by the market's South Main Street site in the future.